A Snapshot Of Snapdeal’s Product Business [40% Driven by Tier-II Cities]

Snapdeal forayed into selling products (like electronics, lifestyle products) March of 2011 and here is a quick QnA with Kunal Bahl, founder of Snapdeal on their product business.

Snapdeal's Product Business

Snapdeal's Product Business

Couple of important points Kunal mentioned during the conversation:

1. Snapdeal boasts of 10 million members.

2. Kunal: “There is no clear winner in product space – Snapdeal isn’t building another amazon or even trying to be. The core philosophy of “ helping consumers get the best deal everyday” drives the product business as well”.

3. Snapdeal does not possess the products (most of the times), so that brings down their (inventory) cost. The company follows marketplace model and ensures 100% QC (Quality Check) by training vendors.

4. What products sell at Snapdeal? Top categories are: Lifestyle (fashion accessories) and electronics (drives 20-25% of the sales).

5. Opportunity wise, Kunal believes that Snapdeal has much bigger opportunity than what other players like FashionAndYou have – especially because of the audience size/traffic/vendor relationship that Snapdeal already has (and can cross-sell much easier).

6. The company sells 4000-5000 products a day and 92% products get delivered within 5 days.

7. 40% of product business is driven by Tier-II cities. Top 8 cities correspond to 54%, next 12 cities contribute 26% and the long tail drives 20% of product sales.

8. As far as supply side is concerned, there is a lot of distress inventory. And demand side is (as-always) hunger for deals.

9. The company is working on its recommendation engine that will help them cross-sell products and service deals – i.e. if you bought a spa deal, you could be interested in cosmetics and the site will surface relevant deals based on your historical data.

10. Top Cities that bought products from Snapdeal are:

Top 8 cities Next 12 Rest of India
54% 26% 20%
Delhi Chandigarh Agra
Mumbai Jaipur Ajmer
Bangalore Coimbatore Allahabad
Chennai Mysore Ambala
Hyderabad Lucknow Aurangabad
Pune Indore Bhopal
Kolkata Amritsar Bhubhaneswar
Ahmedabad Coimbatore Dehradun
Vizag Gandhinagar
Patna Goa
Kochi Guwahati
Nagpur Jallandhar
Jammu
Kanpur
Kozhikode
Ludhiana
Mangalore
Nasik
Pondicherry
Ranchi
Surat
Trivandrum
Udaipur
Vadodara
Varanasi
Vijayawada
Rest of India

What’s your take on Snapdeal’s product business? Will it be a serious threat to other ecommerce players?

Recommended Read: Snapdeal Story